Fitch Downgrades AbitibiBowater Ratings

CHICAGO (AP) — Fitch Ratings downgraded the issuer default ratings of AbitibiBowater Inc. Friday, a day after the newsprint maker filed for bankruptcy protection.

The U.S.-based company, which has administrative headquarters in Montreal, announced Thursday it was seeking bankruptcy protection in Canada and the U.S., saying it had no other option after failing to refinance its debt of more than $6 billion.

Fitch downgraded the rating of AbitibiBowater and subsidiaries Bowater Inc. and Bowater Canadian Forest Products Inc. to "D'' from "C." In March 2008, the agency downgraded Abitibi-Consolidated Inc. and Canada-based subsidiaries to "D."

The agency also downgraded Abitibi-Consolidated Inc., Bowater Inc. and Bowater Canadian Forest Products Inc.'s senior secured ratings to "CCC/RR2" from "B-/RR1."

The downgrade of the senior secured obligations of the companies reflects weaker prices and volumes due to the recession and changes in the media used for advertising and reporting news.

The lower demand for newsprint and some paper grades is unlikely to reverse once North American economies recover, and AbitibiBowater will have become viable in shrinking markets, the agency said.

If the U.S. and Canadian bankruptcy proceedings continue for 30 days, Fitch said it will likely withdraw all credit ratings.